The Fidelity Analyst Survey finds that companies are in the midst of a once-in-a-generation investment boom, driven largely by spending on artificial intelligence (AI) and the infrastructure needed to deploy it. Corporate sentiment is stronger than at any point since the immediate aftermath of the Covid-19 pandemic.
Scale and sectors most affected
- Information technology (IT) is a clear beneficiary: about 81 percent of IT-sector analysts say executives are moderately or significantly more optimistic about the coming year. Material-industry analysts report roughly 64 percent with the same view.
- Utilities have raised their five-year capital expenditure plans by 20 percent in the most recent plan update, after a similar 20 percent increase the previous year.
- Some 63 percent of IT analysts expect an increase in mergers and acquisitions (M&A) activity in the months ahead.
AI’s expansion is stimulating demand for new data centers, power plants and related infrastructure, boosting requirements for energy and raw materials. That has led to a revival of investment in the materials and energy sectors after more than a decade of weakness.
Risks: wages, household spending and geopolitics
Alongside rising confidence, analysts flag material risks. Only 8 percent of respondents expect inflationary pressure to ease over the next 12 months; half expect pressure to remain unchanged, and 40 percent expect it to rise.
A quarterly measure of expected labor costs for the next six months has dropped to near zero for the first time in three years, indicating slower wage growth ahead. Analysts warn that AI adoption may restrain wages by automating tasks, which could weaken consumer demand over time—especially for middle- and lower-income households.
Geopolitical risks—most notably conflicts in the Middle East—are also driving up commodity costs and squeezing corporate margins. Supply-side shocks could prevent central banks from cutting interest rates, and if governments respond with offsetting spending to shield lower-income households from higher oil and gas prices, that could put upward pressure on long-term interest rates. Private-sector credit foundations are showing early but growing signs of stress.
Healthcare analysts additionally note that military conflicts carry fiscal consequences that could increase political pressure for stricter price regulation in the sector, while defense spending priorities may crowd healthcare budgets.
Implications for corporate profits and households
Most surveyed analysts report continued high corporate confidence: companies are benefiting from AI investment and rising equity indices. More than half of respondents expect dividend increases; in IT that share rises to 63 percent.
However, the gains are not evenly distributed. Households that do not benefit from stock-market gains or higher returns remain under cost pressure. Analysts identify affordability and the sustainability of consumer demand as the primary concerns for the coming year.
Outlook
AI-driven technology investment and associated capital spending are likely to continue for years, creating jobs in infrastructure construction (for example, builders and electricians) and, over time, broadening the pool of beneficiaries. In the near to medium term, however, rising commodity prices, subdued wage growth and geopolitical risks could weaken consumer demand and weigh on global economic growth.
The investment boom therefore presents both opportunity and risk: it boosts corporate expectations and capital flows, while raising structural questions about income and demand distribution and macroeconomic stability. Major tech investments by Microsoft, Meta and Google are not only moving equity valuations but are also reshaping where and how investment flows occur—an effect whose benefits may take time to reach everyday households.
